On course to firmer fiscal path

Publication: NST

Date of publication: Oct 26, 2013

Section heading: Main Section

Page number: 002

Byline / Author: By NST TEAM

KUALA LUMPUR: DATUK Seri Najib Razak's 2014 Budget speech yesterday, while short on surprises - apart from the announcement of a six per cent Goods and Services Tax (GST) and abolishment of the sugar subsidy - will place the country on a firmer fiscal path.

No groups were omitted from civil servants, pensioners, women, students, the young and the elderly, low income, middle income even the corporate sector had something to cheer about.

While showing fiscal discipline, the prime minister unveiled an annual blueprint that continued to be caring to targeted groups such as the low income and women, as well as placing the country on the road to achieve high income status possibly earlier than 2020 by stimulating investments.

The efforts to reduce the fiscal deficit to 3.5 per cent by next year from four per cent this year and at the same time improve the government's revenue by replacing sales and services taxes with the more efficientGST, apparently went down well with investors as Bursa Malaysia spiked almost four points as Najib started tabling the budget speech at 4pm yesterday.

"The 2014 Budget will take Malaysia to greater heights and competitiveness in the international arena," said Najib, clad in bright orange baju Melayu when presenting his sixth national budget, fifth as prime minister.

While the opposition made fun of the colour of Najib's baju Melayu which happened to be the same colour as the opposition's alternative budget book, Najib took several digs at them when delivering the almost two-and-half hour speech.

"Our noble efforts will always be criticised by our colleagues on the other side of the aisle (in Parliament). Be that as it may. The truth will always prevail," said the confident looking Najib to loud cheers of government backbenchers.

"We acknowledged that there may be some weaknesses in our administration in the past. However, we have always placed the rakyat's interest above all else.

"With the solid support of the rakyat, we will continue to improve. If we remain united, there are no problems that cannot be solved," said the prime minister who, at the start of his speech, alluded to the uncertainties of the current global economic environment but expressed confidence in a better 2014.

Najib who appeared determined when outlining what needed to be done by the country to tackle the global challenges, said the 2014 Budget was a post-election budget which fulfils promises made during the May general election.

Among the promises that were delivered in the Budget were efforts to safeguard the wellbeing of the rakyat. Apart from civil servants, pensioners, women, students, the young and the elderly and the low income, even the middle income had something to cheer about.

For the middle-income group, who formed the largest number of taxpayers and had complained they had not benefited much from previous budgets, the government proposed a special tax relief of RM2,000 for those with a monthly income of up to RM8,000 received this year, a measure that will result in tax savings of up to RM480.

Another measure that would indirectly benefit the middle income is the upward revision of the Real Property Gains Tax, which will make houses more affordable by curbing excessive speculation.

Analysts and economists generally welcomed the realistic Budget, saying it should garner positive market reactions and bode well for ringgit-denominated risk assets.

"It is a responsible budget for both growth and fiscal discipline as it sets out clear fiscal rules that should put the budget deficit and debt on a firm downward trajectory," said CIMB Investment Bank chief economist Lee Heng Guie.